I’ve been in capital markets for longer than I care to admit. I started in equities before the 1987 market crash, then left Wall Street and went into high-tech startups. When that bubble blew up, forex was becoming a big deal in retail trading given the internet and market deregulation. I like forex because it’s macro in nature – it’s the only asset class that is clearly delineated by the big economic trends. It trades large government news, so if you have an eagle eye view of the world, you have a good idea of how currencies move.

You’ll be speaking at City A.M.’s Active Trader Conference next week on new strategies for day trading FX. What will you cover?

Unlike equities, which have a natural upward drift (as the economy grows and companies become more valuable), currencies are a bounded market. They never go from one to 10,000. In the 1970s, for example, the pound traded for one dollar, then it was two by 2007. Now it’s back to 1.5. Because of this, on any chart 24 hours forwards, almost any currency action becomes random. If you have a big macro point of view, you could make money trading long term. But better opportunities are on daily trades. So I’ll share some strategy ideas to make money from this. We primarily focus on the most liquid instruments, like euro-dollar, as they’re most responsive to price patterns. My ideas are designed to be low-risk low-profit. So I’ll suggest some ways to go for small profit on a consistent basis.

What’s changed since you took part in Active Trader last year?

Almost all my trading is now computer-driven. Markets have become faster, computers have taken over a lot of institutional trading, and they’re making their way towards the retail space. They have become a necessary decision-support tool. We’re also seeing some truly grand volatility. Moves in the yen have radically changed all the yen pairs. And moves in Australian dollar have been similarly huge. It’s rare to see these big sentiment waves. When you get them in currency markets, they tend to be extraordinarily powerful.

How should day-trading strategies change depending on the currency pair?

Currency pairs have truly unique personalities. This is one of the things you discover when you try to develop an algorithm: you can’t apply the same one to everything. You have to intimately get to know the currency pairs, and I hope we can talk about this at the event. It will help you better exploit opportunities. The irony is that, in a zero interest rate world, this aspect of trading has only been exacerbated. They’re far more unique.

How should currency traders read the influence of central banks on the markets?

Rhetoric from policymakers creates two-way volatility. For those concentrating on the long-term picture, pay attention to what they do rather than what they say. For shorter-term traders, it’s the other way round. If you’re seeing efforts to lower rates or tighten them, that’s where you get the longest, most durable trends. Once a central bank embarks on a path in one direction or another, it’s not periodic. It tends to have duration.

What’s the most important lesson you’ve learnt as a trader?

The most important thing is to make your bets small and don’t get stubborn with the market. If you have a position, and the market disagrees with you, it’s always better to cover your position and perhaps try it another time than to continuously fight the market. There’s a great phrase: “losers add to losers”.

What is the biggest mistake traders make?

Many trade far too large to their capacity. Forex markets have incredibly generous leverage. It’s easy to assume a sizeable position that is far more dangerous than you think. Small leverage will absolve you from a lot of sins. And that’s why I favour low-risk, low-reward day trading.

Boris Schlossberg is managing director and founding partner of BKForex. He will be speaking at this year’s City A.M. Active Trader conference on 21 June 2013 at the Grange Hotel, Tower Bridge, London E1 8GP. Buy your ticket now for only £65 at cityam.com/activetrader or call 0203 201 8900

HOW TO BUY YOUR TICKET

City A.M. Active Trader, London’s best trading conference, takes place on Friday 21 June at the Grange Tower Bridge Hotel. To see the full speaker line up and to buy your ticket today for only £65, visit: cityam.com/activetrader or call: 0203 201 8900